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The Indian rupee weakened further on Friday, opening at ₹85.84 against the US dollar. This marks a fall of 12 paise from the previous close of ₹84.72. The rupee’s slide comes after its sharpest one-day drop in over two years on Thursday, as tensions between India and Pakistan escalated.
What’s Happening Between India and Pakistan?
The current tensions started after Pakistan launched eight missiles into areas in Jammu & Kashmir, including Satwari, Samba, RS Pura, and Arnia. India’s air defense systems successfully intercepted these missiles. This strike was Pakistan’s response to India’s earlier attacks on Pakistan’s air defense systems, which were aimed at stopping efforts to target Indian military sites.
Why Is the Rupee Falling?
The rupee has been under pressure for some time. In fact, it has weakened by about 1.47% just this month. Experts believe that if the Reserve Bank of India (RBI) does not step in to control the situation, the rupee could slip even further, possibly touching ₹86.50 against the dollar.
But the falling rupee isn’t only due to India-Pakistan tensions. The US dollar has been getting stronger as the American economy shows positive signs and trade activity picks up. The dollar index, which measures the dollar’s strength against other major currencies, was at 100.63 — a sign of a strong US currency. This puts extra pressure on currencies like the rupee.
How Are Indian Markets Reacting?
Indian stock markets have also felt the heat. The BSE Sensex dropped by over 600 points, and the Nifty 50 index hovered around the 24,000 mark. The real estate sector was hit particularly hard, with the Nifty Realty Index falling 2.5%. Investors are clearly worried and are moving cautiously amid the uncertainty.
Other Factors Impacting the Rupee
Adding to the rupee’s troubles are rising crude oil prices. Brent crude oil is currently priced at $63.10 per barrel. Higher oil prices increase inflation risks for India and weaken the rupee even further, as the country depends heavily on oil imports.
Is There Any Hope?
While the current situation seems tense, some experts believe that if the political situation improves, the rupee and markets could bounce back over time. Historically, financial markets tend to recover once geopolitical tensions cool down. However, for now, the situation remains fragile, and any further developments between India and Pakistan could have a big impact.
What Role Will the RBI Play?
The Reserve Bank of India’s actions will be critical in the coming days. Market analysts are watching closely to see if the RBI will step in to stabilize the rupee and calm market nerves. Any measures from the central bank could help reduce the selling pressure and bring back some confidence among investors.
